Norwegian Cruise Line Holdings has warned that it will continue to report losses until the second half of next year as a result of the Covid-19 pandemic.
Booking volumes in the third quarter to September 30 were negatively impacted by the Delta variant.
The slowdown was heavily weighted to sailings in the fourth quarter of 2021 and early 2022 but “improved sequentially” through 2022.
‘The impact has since abated and net bookings have materially improved over the past six weeks with particular strength for bookings related to sailings in the second half of 2022 and into 2023,” the three-brand group said.
“Despite the temporary Delta impact, the company’s overall cumulative booked position for full year 2022 is in line with 2019’s record levels at higher pricing even when including the dilutive impact of future cruise credits.
“The overall cumulative booked position for the second half of 2022, when the full fleet is expected to be back in operation and at normalised occupancy levels, is meaningfully higher than 2019 and at higher prices.”
The company reported advance bookings of $1.7 billion, including $750 million of FCCs.
NCLH posted an increased adjusted net loss of $801.4 million for the summer peak three months against $638.7 million in the same period last year.
The outcome came despite increased revenue of $153.1 million compared to just $6.5 million in the same period 2020 as cruises resumed in the three month period.
Total cruise operating expense increased 131.3% year-on-year. This was primarily related to crew costs, including salaries, food and other travel costs as ships were prepared to return to service, fuel, costs related to health and safety protocols and other ongoing costs such as insurance and ship maintenance.
NCLH said: “As a result of the Covid-19 pandemic, while the company cannot estimate the impact on its business, financial condition or near- or longer-term financial or operational results with certainty, it will report a net loss for the fourth quarter and full year ending December 31, 2021 and expects to report a net loss until the company is able to resume regular voyages.
“As previously stated, based on its current trajectory and market and public health conditions, the company expects to be profitable for the second half of 2022.”
A phased relaunch for its 28-ship fleet across three brands is continuing.
The company had about 40% of its capacity operating by the end of the third quarter with the fleet in service being “cash flow positive”.
Occupancy in the quarter was 57.4%, reflecting self-imposed occupancy limits.
Looking ahead, approximately 75% of capacity is expected to be operating by the end of the year with the full fleet back in operation by April 1, 2022.
The group entered into a $1 billion commitment this month through to August 15, 2022 that provides additional liquidity.
“The company continues to expect to reach a critical inflection point in the first quarter 2022 with operating cash flow turning positive. In addition, based on the current trajectory, the company expects to be profitable for the second half of 2022,” NCLH added.
President and chief executive Frank Del Rio said: “Our great cruise comeback is on track with 11 ships to-date across our three award-winning brands successfully resuming cruising.
“Initial trends are extremely positive with strong onboard revenue, high guest satisfaction scores and our comprehensive science-backed SailSAFE health and safety protocols working as designed to minimise the impact of Covid-19.
“While consumer concerns surrounding the Delta variant resulted in a slowdown in bookings during the third quarter, net booking volumes have improved over the past six weeks and we continue to see robust future demand for cruising particularly for the second half of 2022 and beyond when our full fleet is expected to be back in operation at normalised occupancy levels.”
Chief financial officer Mark Kempa added: “We are incredibly pleased with our team’s flawless execution of our phased voyage resumption plan and are encouraged to see strong consumer demand, onboard spend and high guest satisfaction across all of our brands.
“We took several actions in the quarter to further enhance our liquidity profile and financial flexibility and better position us on our road to recovery as we pivot from defence to offence.
“As we look ahead, we remain focused on rebuilding our strong track record of financial performance, optimising our balance sheet and delivering on our attractive and disciplined growth profile beginning with the debut of the record-breaking Norwegian Prima in summer 2022.”